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Brazilian exporters warn of de-industrialization because of massive imports

Monday, June 6th 2011 - 21:33 UTC
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Minister Pimentel said the government is preparing a package to recover competitiveness  Minister Pimentel said the government is preparing a package to recover competitiveness

The increase in imports during the first quarter of this year could indicate Brazil has begun a de-industrialization process, cautioned Jose Augusto de Castro, president of the country’s Foreign Trade Association, AEB.

Comparing the first quarter of this year with the same period in 2010, Brazil’s GDP expanded 4.2% but imports of goods and services soared 13.1%, said de Castro.

“Imports soared in volume because of an over valued foreign exchange and because some sectors of the economy are substituting Brazilian manufactured goods with imports which means a de-industrialization process”, insisted the Brazilian businessman.

He also pointed out to the fact that imports of consumer goods are growing faster and stronger than raw materials and intermediate goods, which is again a clear signal of a slowing down of the Brazilian industrial sector.

“Industry stops manufacturing and prefers to buy finished goods because they are cheaper”, said de Castro.

“This will be even more evident in the second quarter with a further contraction of industrial production growth”, warned AEB president.

In related news Brazilian Industry minister Fernando Pimentel said the government was preparing a package of measures to counterbalance the loss of competitiveness caused by the adverse exchange rate, and to promote consumption of domestic manufactured goods.

Measures will include tax exemptions, incentives for innovation investments and a strong financial boost to help fund exports said Pimentel.

“I would like to see them effective sometime before the end of the month but we can’t talk of a time table since who decides is the President”, insisted Pimentel.

The package will also include a government procurement policy with a greater domestic content.

“We already have a policy which is applied to Petrobrás purchases and in the electric power sector, but we are thinking of going even further. Municipal, state and federal governments are big buyers and if we can manage to increase the domestic content of these purchases we would be giving our industry a great boost”, said the minister.

“There’s nothing wrong, retrograde or protectionist in this, all countries of the world does it to defend their economies, to defend local jobs, businesses and their workers”, argued Pimentel.

According to the minister the sectors which have most suffered are heavy industry and manufacturing, which generate many jobs.

Pimentel again insisted that the foreign exchange won’t be solved with internal measures and “is out of control of Brazilian government actions”.

“It doesn’t depend on us. That is directly related mainly to the monetary policy of the United States which is involved in a clearly expansionist monetary policy almost to the fringes of irresponsibility. Who can compete with the US Treasury and the Federal Reserve?, concluded Pimentel.

Categories: Economy, Brazil.

Top Comments

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  • Fido Dido

    Who can compete with the US Treasury and the Federal Reserve?
    Nobody can compete with those gangsters. They don't like to compete and they can't, so it's better for them to be manipulators (print unlimited worthless digital money, lend it for close to zero procent, and manipulate the bond market to keep interest low by QE1, 2 and god knows what other name they will use for QE3).
    Wanna beat them, dump your T-bills (stealthy), buy physical silver and gold, like China. Brazil is alreayd doing business outside the dollar, what is good. Do better, by not accepting visa/master cards from tourists who enter your nation. The more they use it, the more those banksters can print, in other words you keep the beast alive.

    Jun 06th, 2011 - 11:06 pm 0
  • GeoffWard

    There is only one possible strategy for success:
    protect markets against excess foreign imports through tax; control 'dumping',
    assess the best products in any product range and then (whether it be a pharmaceutical drug, an electric drill or a giant road-laying vehicle), through home production, match or improve on the quality and produce in sufficient quantity to get economies of scale.
    Then, sell throughout Mercosur using the price advantage.
    The import tax (presently of 60% ) should take care of the rest.

    Most of this is (apparently) being done, apart from the home 'world-quality' build.

    Jun 07th, 2011 - 01:22 pm 0
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